TAIPEI (Reuters) - Taiwan’s economic growth slowed to its weakest in nearly four years in the first quarter, as the coronavirus pandemic crimped domestic consumption though still-strong demand for electronics helped soften the impact on the trade-reliant economy.

The government has warned of a slowdown in export orders that will especially hurt its tech manufacturers in the coming months, and is rolling out an economic stimulus package expected to be eventually worth T$1.05 trillion ($35 billion).

Gross domestic product (GDP) expanded by 1.54% in the January-March period from a year earlier, preliminary data from the statistics agency showed on Thursday, less than half the pace of the fourth quarter’s 3.31%.

Growth in the first quarter was the slowest since a contraction of 0.09% in the first quarter of 2016 and slightly lagged a forecast of 1.6% in a Reuters poll.

Statistics department official Huang Wei-jie said external demand was unexpectedly strong and the main reason for the slower growth was weaker-than-expected domestic consumption.

“Exports for many neighbouring countries are negative. We are amongst the few countries that are still seeing growth in exports,” he said, attributing the growth to the island’s so far successful disease control measures.

The virus hit consumer spending in the first three months of the year, including the impact from a more than 50% drop in the number of foreign tourists to Taiwan, the agency said in a statement.

The effect from the virus and interrupted supply chains was offset by a “significant boost in domestic production” for products including semiconductors and telecommunications, it added.

Exports and imports rose 3.69% and 3.47%, respectively, in U.S. dollar terms in the first quarter, while consumer spending was down 0.97% from a year earlier.

Taiwan’s March export orders unexpectedly grew at their fastest pace in 17 months, helped by a boom in telecommuting amid the coronavirus outbreak and as factories began reopening in China, the island’s largest trading partner.

RISK OF RECESSION

While Taiwan has not gone into total lockdown to contain the spread of the virus due to relatively successful measures that prevented a rapid spread of the disease, the government has repeatedly warned of uncertainty for the economy. Earlier this month, it downgraded its growth forecast for this year to between 1.3% and 1.8%, from 2.37% in February.

Some analysts, however, say Taiwan’s success at containing the pandemic will not help avert a recession in 2020, citing a hard hit on the island’s domestic consumption and job market due to a collapse in global demand for its exports, which contributed to more than 60% of its GDP.

Things are likely to get worse before they get better, said Gareth Leather, Asia senior economist at Capital Economics, adding the economy is expected to shrink by 5% this year.

“Despite containing the virus at home, a slump in global growth will weigh heavily on Taiwan’s trade-dependent economy over the coming quarters,” he said.

In a sign of the slowing demand for Taiwan’s electronic gadgets, the government expects April export orders to fall between 6.3% and 10.3% from a year earlier.